BAYER HEALTHCARE LLC v. BAXALTA INC.
Oral Argument — 08/31/2020 · Case 19-2418 · 36:57
0:00
Judge Newman
Good morning, Your Honors.
0:11
Appellant Attorney (Edgar H. Haug)
If it pleases the court, this is Ed Haug for the appellant, Bax-Balta.
0:16
And we are asking for the judgment of infringement of the 520 patent to be reversed
0:23
because of the claim construction of Claim 1, which was wrong as a matter of law for at least two reasons.
0:31
We also ask that if the claim construction survives this appeal,
0:37
then the 520 patent is invalid for lack of enablement as to non-random lysine conjugation.
0:45
And if the court were not to disturb the infringement or validity rulings,
0:51
then we also are appealing the damage award, which we think as a matter of law was erroneous and should be vacated.
0:59
With that, I'd like to start, of course, with the claim construction,
1:03
which, as I said, I think is wrong for at least two reasons.
1:06
The district court.
1:08
The claim, the operative element of the claim to require a polypeptide conjugate where the conjugation was not random.
1:19
The word random does not appear in the claim.
1:22
It only appears in the claim construction.
1:24
However, that was the result of the specification, which we believe clearly teaches away from random pegylation by lysines,
1:35
and also a disclaimer during the file history in which the patentee,
1:41
or the applicant, clearly disclaimed any conjugation with reactive groups where it is random,
1:50
namely amine or lysines, and does not ensure that attachment occurs at the B domain,
1:59
and I'm referring to their appeal brief, which is cited throughout our brief.
2:05
And so the disclaimer was found by the court.
2:07
That was not appealed by Bayer here, so there is a disclaimer.
2:12
And between the disclaimer...
2:14
And the specification itself, we believe that the claim construction should have been
2:20
as to exclude conjugation at amines and lysines.
2:28
And then further, what also happened here is because the parties did not agree on what random might mean,
2:35
and this is in response to direct questions from the court during Markman,
2:40
Bayer said it's susceptible to many meanings.
2:43
We gave our definition of random, which was excluding conjugation at,
2:48
amines, or lysines.
2:50
The court did not adopt either one of those or any of those definitions,
2:56
but just used the words not random in its claim construction.
3:00
And later in the case, before trial, we asked the court to clarify or construe what it meant by not random.
3:09
It was clear that there was a dispute between the parties going into trial,
3:13
and the court refrained and declined our request to construe,
3:19
what it meant.
3:21
As a result, it went to trial.
3:25
Both sides were arguing to a jury.
3:29
The adinovate, the accused product here, was random or not in its conjugation.
3:37
And each side had a different version of what it believed not random meant.
3:42
And the court was clear in its claim construction during trial
3:46
that the only construction is the construction that it gave in its order of July 5, 2008,
3:52
and that that was the sole extent of the claim.
3:59
And so it's a classic case, I believe, of pre-markment,
4:03
where the litigants went to the jury and each argued what an important key feature of the claim meant,
4:11
and they left it up to the jury to make its decision whether or not there was infringement or...
4:18
Judge Linn
In history, conjugation originated,
4:35
but I don't find anywhere that suggests that the disclaimer,
4:39
the disclaimer goes as far as you would request.
4:42
For a disclaimer, I mean a lysine conjugation.
4:47
Can you...?
4:49
Appellant Attorney (Edgar H. Haug)
Certainly, yes.
4:51
Yes, Judge Lane.
4:52
So in the disclaimer, which appears at Appendix 4599,
4:57
that's the appeal brief excerpt,
5:00
where it talks about Claim 58, which becomes Claim 1 in the patent,
5:05
they're distinguishing over the prior art, which is the Bossard patent,
5:09
which has lysines both in the B domain,
5:13
and outside the B domain,
5:15
and they're distinguishing over that by saying,
5:18
much of the patent office's prior arguments relied upon possible conjugation at amines or carboxy sites,
5:26
which are present not only in the B domain, but in other domains.
5:30
That is the Bossard reference.
5:32
Any conjugation with these reactive groups, namely the amine or carboxy sites,
5:39
is random, and does not ensure that attachment,
5:43
occurs at the B domain.
5:45
I think the language is very, very clear,
5:47
that they are here disclaiming conjugation with reactive groups such as amines or carboxy sites,
5:54
which are random.
5:56
And that's what they're distinguishing over here in the disclaimer portion of the file history.
6:02
And that is entirely consistent with the disclosure in the patent,
6:06
such as at column 3 to column 4,
6:10
where they talk about random modification,
6:13
modification of factor VIII,
6:14
and they talk about the problems associated with lysine conjugation of factor VIII,
6:20
which has to be random,
6:22
because there are 158 sites in factor VIII,
6:26
158 lysine sites,
6:28
both within the B domain and outside the B domain,
6:31
and there is no way to pegalate to any one particular site,
6:36
and that's why it's random.
6:38
And what they distinguished over was what is disclosed in the patent,
6:43
which is cysteine pegalation,
6:45
which is site-specific,
6:46
meaning that the conjugation will always be at that particular site,
6:51
which is in the B domain.
6:53
Only one site.
6:55
And that's the only way to retain functional factor VIII activity,
6:59
which is another requirement in the claim as part of the claim construction.
7:05
And so this whole argument about the disclaimer and the disclosure in the patent
7:10
also goes to the non-enablement issue,
7:17
to the non-enablement issue,
7:18
because there's simply nothing in the disclosure here in the intrinsic record
7:23
that tells a person of ordinary skill in the art
7:26
how you could possibly conjugate amines or lysines in a non-random way.
7:31
Indeed, it teaches away from that and says you can't,
7:35
and that's what they're distinguishing over.
7:37
It's the point of novelty, really, to this whole patent.
7:40
And so if the claim construction as it sits now,
7:44
putting aside the problem of not even really knowing what is meant by not random
7:50
in the court's claim construction,
7:51
if that claim construction is left to be so broad as to include lysine conjugation,
7:59
it's invalid for lack of enablement.
8:02
There's nothing.
8:03
The examples are all to cysteine pegalation.
8:07
There's nothing in the description other than,
8:10
I suppose,
8:10
as I pointed out,
8:11
in the background where they're teaching away from lysine conjugation.
8:15
And as I go back to my original point on where we were left with with the jury,
8:22
is the whole trial became whether we're talking about a random process or a non-random process,
8:30
but we were using different views of what random and not random meant,
8:34
and that's legal error.
8:36
The court, I think,
8:37
was obligated to make that clear.
8:40
To the parties,
8:41
but more importantly to the jury.
8:43
And that didn't happen in this case.
8:46
And I also point to the spec again at column three,
8:50
line 50 to column four,
8:51
lines,
8:52
I think,
8:52
line 20.
8:55
Lysine conjugation is much more problematical.
8:59
That is what they were distinguishing over in the prior art,
9:02
in their disclaimer,
9:04
and in the rest of the intrinsic record.
9:09
And as I said,
9:10
unfortunately,
9:11
we saw this problem brewing before the trial and asked the court to help and construe what it meant by its construction,
9:23
effectively.
9:24
And we were unable to get that clarification.
9:27
And that carried through the trial.
9:32
I hope I answered your question,
9:34
Jeslyn.
9:35
Judge Linn
Yes.
9:36
Although I have a follow up.
9:38
Is there any way on the B domain lysine conjugation?
9:52
In other words,
9:53
is this based on cysteines in order to get to the B domain?
10:02
Appellant Attorney (Edgar H. Haug)
I think the answer is yes,
10:04
based on the intrinsic record,
10:06
based on what this patent says in its descriptions and all of the examples in the patent.
10:13
There are other,
10:15
obviously,
10:16
there are other amino acids that are in factor eight.
10:19
But this patent is only really talking about site-specific cysteine,
10:24
which is the only one that is shown to work.
10:26
Judge Stoll
Counsel,
10:26
this is Judge Stoll.
10:28
Did the jury hear any expert testimony that would be contrary to what you just said?
10:34
That is,
10:35
did the jury hear any expert testimony about how lysine pegylation could be targeted to the B area?
10:45
Sorry,
10:45
I'm forgetting the name of it.
10:47
I apologize.
10:47
Appellant Attorney (Edgar H. Haug)
The B domain,
10:48
the B domain,
10:49
Joseph?
10:50
Well,
10:51
the experts were not permitted to talk at all about plant construction.
10:55
There was an explicit direction from the trial judge not to allow the witnesses to talk about-
11:02
Judge Stoll
But this is a factual issue,
11:03
isn't it?
11:03
I mean,
11:04
this is like an underlying factual issue that might go to enablement as well.
11:09
And so,
11:10
could you just answer my question before you tell me why it doesn't matter?
11:15
It was a yes or no question.
11:16
Expert testimony or not?
11:19
Appellant Attorney (Edgar H. Haug)
I think the answer is no.
11:21
Judge Stoll
Okay.
11:21
Thank you.
11:23
Judge Newman
All right.
11:24
Let's hear from the other side.
11:26
I'd like to hear Mr. Batkey's view on this same question.
11:34
Mr. Batkey.
11:36
Appellee Attorney (Bradford J. Badke)
Thank you,
11:36
Your Honor.
11:37
May it please the court.
11:39
In answer,
11:40
I think,
11:40
to Judge Stoll's question,
11:42
there was extensive expert testimony on pegylation of lysine.
11:49
And in addition to that,
11:50
there was extensive evidence,
11:52
or the experts and fact witnesses talked about numerous admissions to the FDA,
11:57
including testimony that one,
11:59
went to a controlled targeted pegylation at the B domain,
12:05
predominantly their product,
12:08
adenovate,
12:08
pegylated at the B domain,
12:10
73% of factor VIII adenovate pegylated in the B domain.
12:15
Judge Andrews found this on the J-Mall.
12:17
He said that there was substantial evidence in the record,
12:21
including the FDA admissions.
12:23
And so,
12:24
the experts spoke about this.
12:26
It is a fact question.
12:27
The jury came out,
12:29
squarely,
12:30
against them.
12:31
So,
12:31
Judge Stoll,
12:31
I don't know if that answers your question,
12:33
but the evidence was extensive.
12:35
Judge Stoll
Do you have any particular sites you'd like to share with the court?
12:39
Judge Newman
All right.
12:40
See,
12:41
Mr. Batkey,
12:41
I only heard the first half of part of what you were saying.
12:47
Appellee Attorney (Bradford J. Badke)
I'm sorry,
12:50
Your Honor.
12:51
I'm not sure where you dropped off.
12:53
What I was going to say,
12:53
what I was saying is that there was extensive expert testimony about the pegylation of lysines
12:59
at the B domain,
12:59
which was supported in substantial part by FDA admissions.
13:06
And there were numerous FDA admissions to that effect,
13:11
including they called,
13:14
they told the FDA that the B domain was a hotspot,
13:17
that there was controlled targeted addition of PEG,
13:21
which is the opposite of random pegylation.
13:23
There was an FDA document that 73% of factor VIII in adenovate is pegylated in the B domain.
13:29
The pegylation was predominantly in the B domain.
13:33
And, in fact,
13:33
the FDA,
13:35
in an early meeting in 2009 with Bax-Alta,
13:39
actually told Bax-Alta that your active molecules are those that are pegylated in the B domain.
13:45
We give those sites extensively.
13:48
We cite to all of those instances in our brief,
13:54
including,
13:54
I can tell you,
13:56
the 73% of PEG attachment sites in the B domain is that appendicitis.
14:00
That's appendix 37076.
14:03
The controlled targeted chemical addition in the B domain is at 36937,
14:12
and so forth.
14:15
I mean,
14:15
it's on page 43 of our brief for the sites.
14:18
So there was extensive evidence to that effect,
14:22
and there was really no question.
14:23
The evidence at trial was really rather overwhelming with respect to the amount of,
14:30
of pegylation in the B domain.
14:32
The jury also heard from one of our experts,
14:36
Dr. Pla,
14:37
and we do cite this in our brief,
14:39
about how all they needed to do was optimize some pegylation conditions to favor pegylation at the B domain.
14:47
And that testimony would be from Dr. Pla.
14:51
It's appendix 654 to 71.
14:55
They did very little.
14:56
Once they learned the novel aspect of the claims,
15:01
which was non-random pegylation at the B domain,
15:04
it was very easy for them to proceed and to center pegylation in the B domain.
15:12
If there's no other questions on that,
15:13
I'll turn next to claim construction.
15:16
Judge Linn
Yes.
15:19
How do you target the addition of lysine?
15:33
Appellee Attorney (Bradford J. Badke)
What you do is,
15:34
if your honor takes a look at appendix 654 to 71,
15:38
that's the testimony of Dr. Pla.
15:40
There are certain reaction conditions that are performed in every pegylation reaction.
15:46
One of them is the inclusion of calcium.
15:49
Another one is you adjust pH.
15:51
Another one is you consider the ratio of PEG to factor VIII.
15:55
And then the fourth one is clenching.
15:57
In other words,
15:57
when do you stop the reaction?
15:59
And so,
15:59
if you take a look at his testimony,
16:01
he references an exhibit that was before the jury,
16:06
PTX446.
16:06
That was an,
16:07
that was a document submitted to the FDA.
16:10
And there,
16:11
Baxolta told the FDA what they had to do with respect to those four specific
16:16
reaction conditions to achieve B domain pegylation.
16:21
And I'll take one as an example,
16:22
calcium.
16:23
They just increased the number of calcium.
16:24
And what that does,
16:26
and this was known as early as 1990,
16:28
15 years before the application was filed.
16:32
What calcium does with factor VIII is it exposes the tail-like structure of the
16:37
factor of,
16:38
of the B domain so that it's more available for pegylation.
16:42
They adjust the pH so that lysines are more reactive.
16:46
And then they just had a couple of,
16:49
of runs in their optimizing of the,
16:52
of the amount of PEG to factor VIII.
16:54
And then they just quenched it after the B domain was relatively full of,
16:59
of,
17:00
of,
17:00
of the PEGs.
17:01
And so that's all they did.
17:02
I would put that in the,
17:04
in the category of optimizing,
17:06
rather than experimenting.
17:08
Unknown
So,
17:09
Judge Linn
so in other words,
17:10
it's,
17:10
it's partially true.
17:27
Appellee Attorney (Bradford J. Badke)
I,
17:27
the conditions that in a lysine reaction are the same conditions,
17:34
conditions that are available in a cysteine reaction.
17:38
It's just,
17:39
it's just,
17:39
you may need to optimize them with a lysine in order to direct the,
17:44
the PEG to the factor VIII.
17:46
So the reaction conditions are the same.
17:48
It's not like they needed to introduce some new type of reaction condition.
17:52
It's the same reaction conditions.
17:54
You know,
17:55
the processes are substantially similar.
17:57
Judge Linn
All right.
18:00
What I'm,
18:00
what I'm trying to get at is prosecution history.
18:05
We just,
18:08
it's page 4599 in,
18:11
in clearly is not so a disclaimer of lysine pegylation.
18:24
Appellee Attorney (Bradford J. Badke)
Well,
18:25
I mean,
18:26
one,
18:26
one,
18:26
one reason,
18:27
Your Honor,
18:28
is that the prior art that was distinguished,
18:31
both are disclosed,
18:33
not just lysine,
18:35
but also cysteine pegylation.
18:37
And pegylation,
18:38
you can take a look at Bayer's appeal brief,
18:43
which was on page 3507,
18:45
where Bayer was responding to the examiner's rejection.
18:49
And there was a reference there to the fact that lysine,
18:51
cysteine,
18:52
and arginine were in the prior art.
18:54
So it could not have been the case that Bayer also disclaimed lysine
19:00
pegylation.
19:01
But if you take a look throughout the prosecution history,
19:04
you can see that consistently,
19:07
Bayer,
19:08
Bayer was,
19:10
was distinguishing random pegylation and not lysine pegylation.
19:15
Judge Linn
I think that Mr.
19:23
Appellee Attorney (Bradford J. Badke)
Mr.
19:24
Howe doesn't point out that in his opening,
19:28
he actually gave the jury what that means.
19:31
He said,
19:32
random means you don't know where it's going.
19:34
And if you can't find a target or,
19:36
or can't hit a target,
19:38
it's random.
19:39
The jury here heard plenty of evidence about the target being hit.
19:43
And in fact,
19:43
that's a word that was in their FDA document.
19:45
But that,
19:46
but that meaning was known throughout the trial.
19:49
The experts and the,
19:50
and the witnesses basically had all of the same understanding.
19:54
One of their star witnesses,
19:55
Dr.
19:56
Bossart said,
19:56
pegs just go everywhere.
19:58
One of our inventors,
19:59
Dr.
20:00
Murphy said,
20:00
you're not sure where peg is going.
20:02
Dr.
20:03
Plough,
20:03
one of our experts said pegylation with,
20:05
without regard to location,
20:06
there was no confusion as to what the word random meant.
20:10
And indeed,
20:12
back Salta,
20:13
the,
20:14
they were pushing this,
20:16
this construction of amine pegylation.
20:21
Amine,
20:22
if you,
20:22
if you pegylate with amines,
20:23
it means that it is random.
20:26
But,
20:26
but they dropped that before they got to trial.
20:31
And,
20:32
and Mr.
20:32
Haug gave this new definition,
20:34
which was random means you don't know where it's going.
20:36
And now on appeal,
20:37
they're now arguing a different meaning for the term,
20:41
which is that conjugation occurs at multiple amines.
20:44
You know,
20:44
acid sites.
20:45
So they've been inconsistent in what they've been urging the district court to do,
20:50
but now they're blaming the district court for not adopting a,
20:54
a,
20:56
a definition of random.
20:58
And in fact,
20:58
the district court specifically opened the door to define that term at the charge conference.
21:07
And this is on appendix 1594 to 1598.
21:11
Mr.
21:12
Haug told the district court three times,
21:14
that he did not want to add anything to the claim construction.
21:18
And so it's too late at this point for Baxalta to be coming in now and seeking to,
21:26
to reverse a jury determination and send it back to the district court.
21:32
When,
21:32
after he told the district court before the case went to the jury that no more claim construction is necessary.
21:39
So obviously they made a strategic decision on that and they should be entitled and they should be required to live with it.
21:44
So if there's any other questions on that,
21:52
I think I have a couple more minutes.
21:55
One thing I wanted to add about enablement because Mr.
21:58
Mr.
21:59
Haug brought up enablement is that there really,
22:02
there really was no case put on,
22:04
on enablement.
22:06
And clearly we did not have an obligation to respond to a case that was not made a trial.
22:13
There was some cook conclusory testimony.
22:16
But as we know,
22:18
that can't carry,
22:19
uh,
22:19
the burden,
22:20
uh,
22:20
under Alcon,
22:21
Amgen,
22:22
Herx,
22:22
uh,
22:23
Cephalon,
22:23
and,
22:24
and,
22:24
uh,
22:25
Streck.
22:25
And in fact,
22:26
they didn't even make a stress,
22:27
a threshold showing that any experimentation is needed.
22:31
So we don't even get to the ones factors.
22:33
Um,
22:34
and,
22:35
uh,
22:35
not that,
22:35
uh,
22:36
the optimizing of the conditions,
22:38
as I,
22:39
as I just explained,
22:40
uh,
22:41
even,
22:42
even suggested experimentation was necessary because that does not rise to the level of experimentation.
22:47
But in any event,
22:48
they did not.
22:49
They did not carry their burden.
22:50
Um,
22:51
I just want to say,
22:52
uh,
22:53
one thing.
22:53
I guess I,
22:54
I should move on to willfulness.
22:56
Uh,
22:56
we did cross appeal on willfulness.
22:59
Uh,
23:00
and that's a classic willfulness story.
23:02
It should have been permitted to go to the jury.
23:05
Um,
23:06
the jury was aware that,
23:08
that Nectar knew that Bayer was developing the factor VIII products.
23:12
So there were prior business dealings.
23:14
Um,
23:14
their,
23:15
their random pegalation project when they later worked for Baxalt,
23:18
uh,
23:20
they,
23:21
um,
23:22
uh,
23:23
they,
23:23
uh,
23:24
they knew of Bayer's patent application,
23:27
both Baxalt and Nectar.
23:29
They knew about the patent when it issued.
23:32
Um,
23:32
and in fact,
23:33
uh,
23:34
as of,
23:35
uh,
23:35
as early as 2011,
23:38
that,
23:38
um,
23:39
the claim that was pending in the patent office was substantially the same claim as in the patent.
23:44
Uh,
23:45
significantly what the district court did is it excluded a poster,
23:49
uh,
23:49
which was a description of the B domain pegalated invention by Bayer,
23:55
which was made at a public gathering.
23:58
Baxalta scientists were present.
24:00
Uh,
24:01
on this poster was,
24:03
uh,
24:04
significant information,
24:05
including some charts showing the retention of activity if you pegalate in the B domain,
24:11
which was a revolutionary concept at the time.
24:13
And,
24:14
uh,
24:14
within a very short period of time,
24:16
that information was circulated to scientists,
24:19
at Baxalta.
24:20
Shortly thereafter,
24:21
they dropped their random pegalation program with Nectar and turned to pegalating B domain.
24:28
And within a very short time after that,
24:30
they were at the FDA already with work having been done on pegalating B domain.
24:35
So that evidence that was excluded was significant,
24:39
uh,
24:39
and it should have been,
24:41
uh,
24:41
we should have been able to run with it and,
24:43
and the case should not have been taken from the jury.
24:47
So,
24:50
uh,
24:51
with that,
24:51
uh,
24:52
does,
24:52
uh,
24:52
I'll ask the panel if it has any questions.
24:55
Judge Newman
Okay.
24:55
Any questions from the panel at the moment?
25:00
All right.
25:01
Thank you.
25:01
Then we'll hear from Mr.
25:02
Howe.
25:02
Your Honor,
25:23
Appellant Attorney (Edgar H. Haug)
sorry.
25:24
I think we had a,
25:25
uh,
25:26
a problem with the communication.
25:28
Uh,
25:28
I,
25:28
I would like to start.
25:29
Mr.
25:29
Bakke talked about,
25:31
uh,
25:31
the reaction conditions in the,
25:33
uh,
25:33
being similar between cysteine and lysine,
25:36
um,
25:37
conjugation.
25:38
There's absolutely nothing in the patent about reaction conditions.
25:41
Certainly,
25:43
as to lysine pegylation,
25:44
um,
25:45
and so,
25:46
uh,
25:47
we have to stay with the patent.
25:48
That goes both to claim construction as well as to the enablement issues.
25:52
The processes are in no way,
25:54
uh,
25:55
the same or even close to being similar.
25:58
Cysteine pegylation allows site-specific non-random conjugation,
26:02
whereas lysine does not as they disclaimed in that prosecution.
26:07
In response to the question from Judge Lynn,
26:09
the,
26:10
uh,
26:11
relevant portion from Appendix 4599,
26:14
the appeal brief by Bayer,
26:16
uh,
26:17
it's not talking about cysteines or arginines or anything else.
26:20
It's very clearly talking about possible conjugation at amines or carboxy sites.
26:27
And these reactive groups result in random conjugation and cannot,
26:33
does not ensure attachment at the B domain.
26:36
It couldn't be clearer.
26:37
It is very clear,
26:38
and as I said earlier,
26:39
completely consistent with the,
26:41
with the specification.
26:42
Unknown
Um,
26:43
Appellant Attorney (Edgar H. Haug)
Mr.
26:43
Bakke also talked about some of the expert testimony here.
26:46
Um,
26:47
the expert for,
26:49
um,
26:49
Bax-Volta,
26:50
Dr.
26:51
Zalipsky said it was not possible to,
26:53
um,
26:54
pegylate lysine,
26:56
uh,
26:56
non-randomly.
26:58
Full stop.
26:59
It's just not possible to do.
27:01
But more than that,
27:02
the inventors,
27:04
and this goes to enablement as well as claim construction,
27:07
but really enablement.
27:08
The inventors themselves,
27:09
there were two inventors who testified,
27:11
who testified at this trial.
27:12
It was Dr.
27:13
Murphy and Dr.
27:14
Pan,
27:15
who was the lead inventor and also he wrote the patent application.
27:20
And this is in our brief at 54.
27:23
Dr.
27:23
Pan was asked,
27:24
did you ever consider lysine pegylation as an option for meeting the goals of the KGN project?
27:32
Answer,
27:32
I didn't think it was possible.
27:35
Question,
27:35
why is it you never used lysine pegylation?
27:38
Answer,
27:39
well,
27:40
if you look at a lot of what I wrote in the proposal background and also a lot of that in the patent application,
27:46
I really never thought,
27:47
especially for factor eight,
27:49
such a complex protein with so many lysines,
27:52
it would not be a feasible way to make that work.
27:57
And then Dr.
27:57
Murphy was also asked,
28:00
question,
28:01
there is no data in here,
28:02
the patent,
28:03
that shows lysine pegylation at the B domain.
28:06
Is there?
28:07
Answer,
28:07
there is no data in this patent.
28:09
Right.
28:10
So yes,
28:11
we do not have data that shows lysine pegylation in this patent.
28:15
It goes on,
28:16
question,
28:17
is there anything in this patent that you're aware of that talks about pegylating lysines in a non-random way?
28:24
Answer,
28:24
not in this patent.
28:26
The testimony could not have been clearer from the two inventors of this patent.
28:31
The expert,
28:32
at least on the Baxalticide side,
28:35
said it was consistent.
28:36
It wasn't even possible to do.
28:38
And I also would point to the argument from Mr.
28:42
Batke about adenovate,
28:44
which is the accused product again,
28:45
and what adenovate did or didn't do as far as targeting the B domain,
28:51
for example.
28:52
There was legal error here in the judge's Jmol decision,
28:56
where when he denied the Jmol on lack of enablement,
29:02
he relied on adenovate itself as showing you could do lysine,
29:07
non-random pegylation based on what the jury had found.
29:11
However,
29:12
adenovate only came into existence many years after the critical date of the patent.
29:19
It's not legally relevant and shouldn't have been considered at all.
29:25
And so that was also legal error,
29:28
I believe,
29:29
in trying to find a basis for the enablement finding.
29:33
And I would like to at least mention,
29:36
in the one minute or so I have left,
29:39
on the damages,
29:40
our brief,
29:41
I think the brief very,
29:42
very clearly goes through what happened in the damages.
29:45
However,
29:46
I would summarize our position in part to say what happened here is the expert
29:51
had an opinion before trial of one reasonable royalty,
29:56
a single reasonable royalty.
29:58
That opinion was excluded on a Daubert motion.
30:02
But the rest of his analysis was allowed to pass,
30:06
to come in.
30:07
And the opinion went from one reasonable royalty,
30:11
which the expert was not allowed to testify about,
30:14
to saying that the jury could just pick,
30:17
speculate,
30:18
pick any royalty between 5 and 42%.
30:22
And it was clear legal error to permit the jury to speculate in that regard.
30:28
And as I said,
30:29
I think our briefing goes through that in much detail and cites to the record.
30:35
And I'm sure your honors will appreciate the argument from reading those briefs.
30:42
Judge Newman
Thank you,
30:43
Mr.
30:43
Haag.
30:44
Thank you.
30:45
You've raised a new issue,
30:47
and I'm going to give Mr.
30:49
Bakke a couple of minutes to respond since you hadn't mentioned the damages aspect.
31:05
Thank you.
31:05
Thank you,
31:13
Appellee Attorney (Bradford J. Badke)
your honor.
31:14
I'll start with damages.
31:16
If you look at the 17.78% return,
31:21
return by the jury,
31:23
applying the right height standard,
31:25
it was not so outrageously high as to be unsupportable.
31:29
Clearly,
31:30
what the jury got,
31:31
and the district court recognized this,
31:33
is that our expert,
31:34
Dr.
31:35
Adonke,
31:35
performed a substantial analysis to determine the end point.
31:39
Judge Stoll
Counsel,
31:40
is this your rebuttal argument?
31:42
Judge Newman
I understand.
31:55
Judge Stoll
Thank you.
31:58
Appellee Attorney (Bradford J. Badke)
I'm sorry.
31:59
So what I was saying is that the district court recognized that Dr.
32:02
Adonke performed a substantial analysis to determine the end point.
32:05
And when you look at what the facts are that came in here,
32:09
and they're set out on page 59 of our brief in detail,
32:14
but you had two parties who were fierce competitors.
32:17
Bayer did not give licenses to competitors.
32:20
Bayer was trying to market its own extended half-life product.
32:24
In fact,
32:24
Salta was desperate to launch a dynovate,
32:26
a product that's called its flagship.
32:28
So if you look at that 17.78,
32:31
which is at the low end of Dr.
32:33
Adonke's range,
32:34
you can see that Dr.
32:35
Adonke,
32:35
the jury did the hard work of assessing all of the evidence,
32:40
which is all it really needs to do.
32:42
Indeed,
32:42
under the Powell case,
32:44
this court has determined that a range giving the jury a range is just
32:48
fine.
32:49
And in fact,
32:50
in other cases,
32:51
such as Apple Smith,
32:52
Klein and Fuji photo,
32:53
this court has determined that a jury can come to a reasonable re royalty
32:59
on their own,
33:00
based on the record as a whole,
33:01
and even reject both experts rates.
33:04
So that's exactly what the jury did here.
33:08
Dr.
33:09
Adonke testified for some 60 pages of transcript as opposed to their expert,
33:14
Dr.
33:15
Rouser,
33:15
who gave very brief testimony,
33:17
some 20 pages.
33:18
And so it's very clear that this was,
33:21
that there was substantial evidence supporting the jury's damages verdict.
33:28
If I could just mention something about enablement,
33:36
because Mr.
33:37
Howard went into great detail on enablement,
33:39
which he didn't,
33:40
which he didn't get into,
33:41
um,
33:42
on his,
33:42
uh,
33:43
in his earlier remarks,
33:44
this was a time trial.
33:47
Um,
33:47
and,
33:48
uh,
33:49
they decided that they were not going to emphasize or put in much evidence
33:53
at all on enablement.
33:55
I have to make a decisions on how to allocate my time in a jury trial.
33:59
Uh,
34:00
we had 14 hours and I sh I don't have to,
34:03
uh,
34:04
address an issue like your enablement that they did not put any evidence in
34:10
that was all conclusory in nature.
34:12
Uh,
34:13
we did anyway.
34:14
Uh,
34:14
and I referenced Dr.
34:15
Plus testimony and there was other testimony from our experts really
34:19
optimizing.
34:20
So I'm just saying that they failed in their burden.
34:23
Uh,
34:23
and,
34:24
um,
34:24
and so they,
34:26
um,
34:26
I urge the court to reject their appeal on that basis alone.
34:32
Judge Newman
Okay.
34:33
Thank you,
34:34
Mr.
34:35
Radke.
34:35
Now,
34:36
Mr.
34:37
Howe,
34:37
can you use one minute?
34:38
Can you use one minute?
34:40
The damages aspect?
34:43
Appellant Attorney (Edgar H. Haug)
Uh,
34:44
yes.
34:44
Thank you,
34:44
your honor.
34:45
Um,
34:46
once again,
34:47
what happened is,
34:48
um,
34:48
Mr.
34:49
Donkey gave an opinion that,
34:51
uh,
34:51
the reasonable royalty would be 23.75%,
34:55
which was the midpoint between what he said was the bargaining range,
35:00
which went from five,
35:02
uh,
35:02
percent to 42.4%.
35:05
Judge Newman
That's not what the jury selected.
35:09
Appellant Attorney (Edgar H. Haug)
That's not what the jury did.
35:11
And so what happened was,
35:12
um,
35:13
in a Daubert,
35:14
um,
35:14
uh,
35:14
his 23.75% royalty was,
35:17
was,
35:18
um,
35:18
kicked out.
35:19
He was not allowed to testify to that because it didn't have any proper basis in the record.
35:23
But the important thing is the bargaining range was not a range of reasonable loyalties.
35:28
And in his deposition,
35:30
which is in the record here,
35:31
he clearly said that it would not be a reasonable loyalty to go to 42%.
35:36
For example,
35:37
there's a bargaining range.
35:39
And he said,
35:40
you go in the middle.
35:41
What then happened when that got excluded,
35:43
he then said to the jury,
35:46
this bargaining range is a feasible range to pick any reasonable royalty you want.
35:51
And that's what was argued to the jury.
35:53
And they were given no basis for what they came up with,
35:57
which was 17.78.
35:59
That number appears nowhere.
36:00
And we were not allowed to cross examine Dr.
36:03
Adanki about the opinion he gave in his report,
36:07
namely the midpoint being reasonable royalty.
36:10
We could not cross examine him on that.
36:13
So we couldn't,
36:14
go to his credit.
36:15
We couldn't show his credibility or test his credibility on the basis of giving an opinion in his report,
36:21
which was completely different from what he gave at trial.
36:24
And we were not able to get into what really happened here.
36:29
Judge Newman
All right.
36:29
I think we've.
36:30
Thank you.
36:31
Exceeded some questions from the panel.
36:38
No,
36:38
thank you.
36:39
Your submission.
36:44
The honorable court is adjourned until tomorrow morning at 10 a.m.